PG&E threatens to pull out of deal with state

SAN BRUNO BLAST Utility hints it will pull out of agreement on records unless panel agrees to limit questions for engineer

Published 4:00 am, Thursday, April 7, 2011

PG&E is hinting it will pull out of a $3 million settlement with the state Public Utilities Commission over allegations of flawed record keeping if commissioners are allowed to ask about its past practices at a public hearing on Monday.

The veiled threat, lodged this month in a regulatory filing with the commission, marks the latest turn in the running dispute over PG&E's records regarding its gas transmission system, which came under fire following the Sept. 9 gas pipeline blast in San Bruno that killed eight people and destroyed 38 homes.

Last month, state regulators declared PG&E in "willful non-compliance" of a March 15 deadline the commission imposed to produce records to prove safe operation of its urban transmission lines. PG&E did not submit detailed records for nearly one-third of its 1,800-mile urban network, prompting threats of fines.

The following week, both sides forged a deal giving PG&E until the end of August to come up with proof and pay an up-front $3 million fine, as well as $3 million more if it cannot comply by the end of August. The settlement adopted what both sides called an "aggressive but doable" timetable.

Critics, including state Attorney General Kamala Harris, have attacked the terms as too lenient.

On Monday, the commission is set to hold a hearing on the matter and discuss the settlement. Late last month, Commissioner Mike Florio instructed PG&E to bring "its most senior engineer in charge" of the ongoing inspection effort to answer, under oath, for PG&E's pipeline safety program.

The official must answer for "any fact or issue discovered that may affect public safety," Florio noted.

The testimony would come after PG&E's argument related to the record-keeping matter.

But PG&E, in an April 1 filing in response to Florio's instructions, wants "any questioning at the argument" to be "limited to the stipulation" before the commission. Otherwise, PG&E's "due process" rights would be violated, the utility contended.

And if such a violation occurs, PG&E said, it would be entitled to "an opportunity to put on its entire defense" at a full hearing - which would scuttle the deal.

Such a hearing, PG&E stressed, would require proof beyond a reasonable doubt to support any contempt finding related to record keeping. PG&E has insisted all along that it believes it was in compliance with the March 15 deadline and only agreed to the settlement to move forward.

Asked about the April 1 response filing, PG&E spokesman Joe Molica said the motion "simply seeks to clarify the scope of next week's oral arguments before the commission."

Florio, who is the hearing officer, has yet to reply on the record to PG&E's filing. He did not return calls for comment on whether he will in any way agree to limit what the panel may ask of the PG&E officials.

Assemblyman Jerry Hill, who represents San Bruno, said PG&E's legal stance belies its repeated public claims related to its priorities of safety and transparency.

"To me, this is just another example of who is driving the train - here, PG&E is dictating to the PUC how they are going to do business," Hill said, adding that he is in favor of simply going forward on the record-keeping case.

"I say fine them. My calculations are up to $20 million in fines so far."

He said that PG&E has promised a "new direction" with the exit of two executives as of Wednesday and renewed pledges to change their operations, yet, "on the other side, it's business as usual of keeping the public from knowing by refusing to answer questions."

"Here, they are lawyering up when they feel threatened or the truth may hurt," he added.

Loretta Lynch, former president of the commission and a frequent critic of PG&E, said the action by the utility was "an egregious example of shirking its regulatory responsibilities."

She said she believes Florio was justified in seeking answers behind the record-keeping dispute, and said PG&E has no right to try to muzzle commissioners from seeking the truth about its handling of the matter.

"It's like a defendant who has made a plea deal with the prosecutor telling the judge they can only consider the deal and not the underlying circumstances of the charges," she said.

"The commission should reject the attempt to limit its authority," she said.

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